Motorola Home And Networks Sales Fall 27%

Motorola's Home and Networks Mobility segment, housing set-tops, cable modems and other service-provider equipment, had second-quarter sales of $2.0 billion, down 27% from the year-ago period.

Operating income for Home and Networks Mobility unit was $153 million, down 38% compared with $245 million in the year-ago quarter. The company blamed the declines on a continued capital-spending pullback by cable providers and other network operators.

Greg Brown, co-CEO of Motorola and CEO of Broadband Mobility Solutions, said the year-over-year comparison is "tough" because the second quarter of 2008 was "arguably the best ever" in the Home unit, primarily due to strong DVR demand and the Federal Communications Commission's mandate for cable operators to use separable security in their own set-tops.

For the three months that ended July 4, the Home unit's sales were $1.0 billion, flat compared with the first quarter of 2009. "We expect operators to remain cautious with capex spending," Brown said on a conference call Thursday with analysts. "We continue to expect the addressable market for Home to be down at least 10% in 2009 compared to 2008."

As the economy recovers, he added, the total number of homes with digital TV service and the penetration of HD and DVRs will continue to grow.

The company shipped 3.7 million digital entertainment devices in the second quarter, reflecting an increase in demand for HD DVRs versus the first quarter. To date, it has shipped 650,000 WiMax consumer-premises devices.

Meanwhile, Motorola kept feeling the pain from its shrinking Mobile Devices business, which had sales of $1.8 billion -- down 45% from the second quarter of 2008.

The company reported total revenue of $5.5 billion for the three months ended July 4, a decline of 32% from the year-earlier period, and a slight profit of $26 million (versus a $4 million net profit a year ago).

Motorola ended the quarter with $6.5 billion in cash, a sequential increase of $360 million. The company said is has increased its cost-reduction plan by $100 million and now expect total cost savings of $1.8 billion for 2009.